We are consulting on summary guidance for the rail industry on open access applications. The guidance also introduces a routine approach to monetising costs and benefits, and removes the benchmarking stage of the not primarily abstractive test (NPA).
Background
In April 2024 we published a report on Assessing the costs and benefits of new open access services. We concluded that ORR should:
- continue to use the not primarily abstractive test to information our decision making
- consult with industry on a proposal to introduce a routine approach to monetising the costs and benefits associated with open access
- improve our guidance by explaining our approach to open access decision making more fully
The new guidance summarises ORR’s existing policies which are contained in other guidance documents. Our approach is also set out in a letter to industry issued on 12 September 2024.
Who should respond to this consultation?
This consultation will be of most interest to:
- current and aspirant open access operators
- rail funders and service specifiers
- publicly funded (franchised) operators
- infrastructure managers
We also welcome views from other interested parties such as:
- current or potential investors in open access services
- local and regional government
- industry advisers and consultancies
Proposed changes
Monetising costs and benefits
We are proposing a routine approach to monetising the types of costs and benefits associated with an open access application. This is based on the factors that would normally be included in a transport-focused cost benefit analysis. We intend to use this to inform weighing of our duties, particularly in cases where the NPA test result is marginal. Over time, this will allow us to develop an evidence base on the monetised costs and benefits of open access.
We propose using DfT’s transport analysis guidance (TAG) to inform our approach. This would enable us to monetise the following factors:
- social
- economic
- environmental
- indirect tax transfers
While ORR already weighs these issues in decision making, to date we have not routinely monetised all of them, or placed substantial weight on them.
ORR considers each case based on its merits and determines what weight to place upon each of our duties. We anticipate that the routine quantification of wider costs and benefits would be most relevant in cases where the NPA test result was marginal, and other factors (such as performance) were not decisive.
Removing the benchmarking stage of the NPA test
The guidance includes one change to the NPA test - to remove the benchmarking stage. Benchmarking was one way we used to adjust our central forecast to account for the tendency of MOIRA-based forecasts to under-forecast the impact of new services that involve large changes in journey times or those starting from a very low revenue base. We consider that the introduction of higher generalised journey times (GJT) elasticities in Passenger Demand Forecasting Handbook 5 and the use of direct demand forecasting methods such as gravity models provide more robust ways to adjust forecast to account for this.
Benchmarking based on comparing previous growth rates on open access routes is less robust as it is unable to measure abstraction or account for other demand drivers such as changes in population or incomes. We may continue to use benchmarking for small-scale applications, such as for an additional service.
There are no further changes to ORR’s existing policies or procedures, and we will continue to conduct the NPA test.
Responding to this consultation
We welcome views on the draft guidance and ORR's approach to:
- monetising the costs and benefits associated with open access
- the removal of the benchmarking stage of the NPA test, and
- the explanations we have provided of ORR decision making
You can respond by online form or by emailing Track.Access@orr.gov.uk. Please include ‘Open access guidance’ in the email header.
You can also write to:
Track access team
Office of Rail and Road
25 Cabot Square
London, E14 4QZ
Please submit your response by Friday 1 November.
Publishing your response
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We plan to publish all responses to this consultation on our website.
Should you wish for any information that you provide to be treated as confidential, please be aware that this may be subject to publication, or release to other parties or to disclosure, in accordance with the access to information regimes. These regimes are primarily the Freedom of Information Act 2000 (FOIA), the UK General Data Protection Regulation (UK GDPR), the Data Protection Act 2018 (DPA) and the Environmental Information Regulations 2004.
Under the FOIA, there is a statutory code of practice with which public authorities must comply and which deals, amongst other things, with obligations of confidence. In view of this, if you are seeking confidentiality for information you are providing, please explain why. If we receive a request for disclosure of the information, we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on ORR.
If you are seeking to make a response in confidence, we would also be grateful if you would annex any confidential information, or provide a non-confidential summary, so that we can publish the non-confidential aspects of your response.
Any personal data you provide to us will be used for the purposes of this consultation and will be handled in accordance with our privacy notice which sets out how we comply with the UK GDPR and Data Protection Act 2018.
Consent
In responding to this consultation you consent to us:
- handling your personal data for the purposes of this consultation;
- publishing your response on our website (unless you have indicated to us that you wish for your response to be treated as confidential as set out above.)
Your consent to either of the above can be withdrawn at any time. Further information about how we handle your personal data and your rights is set out in our privacy notice.
Format of responses
So that we are able to apply web standards to content on our website, we would prefer that you email us your response either in Microsoft Word format or OpenDocument Text (.odt) format. ODT files have a fully open format and do not rely on any specific piece of software.
If you send us a PDF document, please:
- create it directly from an electronic word-processed file using PDF creation software (rather than as a scanned image of a printout); and
- ensure that the PDF's security method is set to no security in the document properties.